Wichita eagle., 1887-06-24
TRADING IN OPTIONS.

The recent break in the Chicago whea
market, it seems, is liable to cause loss Il
people who had no hand or part in th'
stupendous speculation. Generally tht
class of men who put up their money OF
these manipulations of the produce market
are not around asking the sympathy of the
public, after they have lost margins. Or
the contrary, they usually claim to have
lost nothing. and exhibit large amount
of nerve in times of adversely. The
amount of their losses is known only tC
their immediate friends unless the loss is
sufficiently large to force them into bank
ruptcy.
The failure of the Fidelity bank of Gin
cinnati, occasioned by the recent collapse
in the Chicago wheat market, will not only
cause loss to the creditors of that institu-
ton, and perhaps much suffering; but it
creates an anxiety in the minds of the av-
erage newspaper reader to know something
about these option traders, and of ''cor-
ners" in the produce market. To great
many readers of newspapers the terms
"bulls and BEARS "options" and mar
gins" are perfectly unintelligible terms; re-
garded in about the same light as the tech
nical terms used by physicians. A great
many farmers when reading comments on
the markets, in which they are interested,
wonder why these unintelligible terms are
used We sometimes hear the expression:
"Why don't those fellows talk United
States"
Of course the men who lay out additions
and build motor lines, or build cribs q
quarter of a mile long and fill them up
with corn to hold on speculation know all
about the glain markets, and this is
not written for their benefit. When we
have explained the mode Of doing bust
ness on the Chicago board of trade, the
reader can form an idea of how great bank
ing institutions like the Fidelity of Gin
cinnati is sometimes ruined
The trading on the board of trade in
Chicago is mostly done by commission
merchants who are members Of the board
of trade. 1t is sometimes impossible to
tell who are the capitalists putting up the
money on these trades as the commission
merchant keeps an account with his Gus
toner, and the trades are conducted in the
name of the commission merchant or his
firm. Thus i: will be seen that moneyed
man in Wichita or any other town could
be a large operator on the Chicago board
of trade and no one except himself and
his commission merchant would know
anything whatever about it, Suppose
John Smith sends an order to his commits
sion merchant to buy for him one hundred
thousand bushels of August wheat What
is meant by August wheat, is that the
seller can deliver John Smith one hund-
red thousand bushels of wheat on any day
he may elect in the month of August
And John Smith must take and pay for
the wheat.
If on the day of delivery wheat is ten
cents per bushel higher than the day on
which John Smith made his purchase, he
has made ten thousand dollars, less one
half cent per bushel which his commits
sion man charges for his work in the trade
If John Jones sold the wheat he has lost
ten thousand dollars plus the charges of
his commission merchant. In a trade of
this kind John Smith makes money
when the market goes up. Hence
he is called Bull" on the market. He
is called Bull because of the disposi-
ton of that animal to toss with his horns
into the air anything opposed TO him.
John Jones makes money when wheat goes
down, hence he is called Bear" on the
market. He is called a Bear" because
old Bruin is supposed to throw his ugly
carcass onto an opponent and press him
down TO the earth.
The speculative trading on the board Of
trade is the cause of continual conflict
between tie Balls ard Bears" The
Bulls resort TO every means to put the
markets higher. They report small
amounts of grain in the hands of farmers,
and gloomy crop prospects. Storms, cy
clones. drou'hs rust and bugs are reported
by the Bulls" TO be doing immense dam
age TO the growing crops. and they show
markets must so higher. On the other
hand. the Bears" report the finest pros
pect for growing crops that has ever been
known since the world began. and the
farmers bins all full TO overlooking with
grain, and the old story about cheap wheat
in India is frequently revived by the
Bears" TO put the markets lower. Be.
tween the Bulls" and Bears" there is q
large amount of lying done, ard the news
papers are frequently imposed upon TO
give publicity 10 their lying crop reports
When John Smith and John Jones buy
or sell wheat in Chicsgo their commission
merchants require them to put up an
amount Of money equal to five cents per
bushel~ TO secure them against loss. This
money is called margins If the market
goes against trader he must keep putting
up margins. or he will be closed out. 1t
is supposed that some of the officers of the
Fidelity Bank were large buyers in wheat
recently in Chicago and in order te keep
up their margins they put up not enly
their individual money. but all belonging
TO the banN, and lost it. Hence the bank